Sense & Centsibility Blog
Two adult women with arms around each other and laughing.  Text accompanying the picture says "Saving for the Unexpected. America Saves Week, February 27 to March 3, 2023.

How to save for the unexpected — even when you’re struggling

If you are experiencing financial stress and even finding yourself broke before you receive your next paycheck, saving money can seem like a daunting task. Yet setting aside money, even when you are struggling with your finances, IS possible. It’s also crucial for managing financial emergencies and avoiding future debt.

Save for the unexpected and preventing future debt

An emergency savings fund is crucial when unexpected expenses pop up. Your car might need an unplanned repair; an appliance in your home could break down suddenly; or you or a family member may need a trip to urgent care.

It is also important to save so you can avoid taking out future debt, especially if you owe money already. Types of debt vary — from those with no interest (like medical debt) to low interest (like a car loan or credit card with a low interest rate) to very high interest or high fee (like credit cards with high interest rates, or online, payday, title or tribal loans). The more that you are in debt and struggling to pay bills, the more likely your credit score is low, and the more likely that high interest debt options are among the few choices available to meet an unexpected financial emergency. Getting money from these high interest sources eats up more of your money and creates even more financial stress.

Because of this, it is much better to have money set aside in case of unexpected expenses. Here are several strategies for building your savings, even if you’re facing financial challenges.

Create a working budget

Review your current budget. If you don’t have one, consider creating one using the 50/30/20 method, based on your net income. (Net income is the amount of income you see in your checking account after taxes and other items are taken out.)

Here’s how the 50/30/20 method works:

  • Set aside 50% of your net income for necessities — the expenses you can’t avoid like food, housing and utilities.
  • Set aside 30% for wants. Distinguishing between needs and wants isn’t always easy and can vary from one budget to another. Generally, though, wants are the ‘extras’ that aren’t essential to living and working. They’re often for fun, such as non-essential clothes purchases, entertainment/dining out and subscription services, like gym memberships, Netflix/Hulu, etc.
  • Set aside 20% for savings and debt. Pay down existing debt while still putting money away into savings.

Track spending

A key to saving is to not overspend. Once you have created a budget, keep yourself accountable by tracking your expenses. This can prevent you from overdrawing your checking account. Bank fees charged to cover insufficient funds can be hefty and can really throw a wrench in any progress being made to help you save.

Some ways you can track spending:

  • Save receipts from stores, put them in an envelope in a kitchen drawer, and take time to tally them up each month,
  • Download a free, safe app on your phone that essentially does the same thing. Examples include Mint, Goodbudget and. for couples, Honeydue.
  • Review previous bank statements.

These methods can help you figure out how much money you are REALLY spending and then you can look for ways to plug any leaks in the budget. Remember: everything that costs money counts! The clothes you bought on a credit card…it counts. The cash you give to your kids…it counts. Going out with friends for coffee or happy hour…it counts.

Using credit cards can be an easy, tempting way to spend more money than you have. The best way to use credit cards is to only use them for what you can pay off in full every month. If you keep your card balance at $0 at the end of each month, you will avoid interest charges. If you cannot do that, then it might be best not to use them at all. The money you save by not buying things on credit is money saved for yourself rather than facing growing debt with compounding interest.

Other tips and tricks to build your savings:

  • Treat saving like a monthly bill. Start putting at least $10 per paycheck into a separate savings account or an envelope. Read our resource on setting up an envelope budgeting system.
  • Give yourself a monthly or pay period ‘allowance’ that you take out in cash. Once it’s gone, then you’re done spending on non-essentials that pay period or month. This removes the temptation to dip into savings and overspend.
  • Set financial goals for yourself, and reward yourself for meeting them. For example, if you bring your lunch to work for a month, treat yourself later to a coffee or a meal out.
  • Don’t compromise your financial goals due to undue pressure. If everyone at work goes out to eat and wants to include you, it is still okay to say no if it is something you cannot afford. Sometimes, your coworkers might not understand because they might be in a different financial situation than you and that is okay.
  • Set boundaries and practice delaying gratification. This could mean, for example, not purchasing something you want right now. Or it could mean saying no to a loved one who wants financial help from you but is not living within a budget.
  • Find support, if possible, from friends, colleagues or your immediate family. Living within a tight budget and working towards a savings goal is easier when more people are on board and when you have support.
  • If you get a tax refund or other surplus at any given time, set aside some or all of it into savings.
  • Sometimes people can make the mistake of paying down their debts all at once, and then down the road there is not enough money to make minimum payments toward debt. Pace yourself so you can always make at least the minimum payments required each month. This will prevent you from being hit with extra fees and late charges that make saving and paying for things more difficult.

Keeping an even keel

Just as a sailboat needs a keel at the bottom of the boat to keep it from tipping, savings is like a keel that keeps you afloat when the financial waves are rocky. Maintaining a practice of saving consistently can be challenging. During some months, you might have more income than others. It takes a lot of discipline to stick to a budget so that you save money when times are plentiful and you then have enough money when times are tight.  

Saving can also be frustrating. If you dip into your savings, you might deplete the entire account. Then you have to start over and build up savings again, and if necessary, use it again in the future for another unexpected expense and continue the cycle. While frustrating, count that as a WIN because that means you have avoided putting expenses onto a high interest credit card and accruing debt. You actually just borrowed from yourself at no interest. Reflecting on and recognizing your successes and achievements are helpful strategies for continuing to save when those challenges and frustrations arise.

It’s also important to think of saving as a marathon, not a sprint. Taking time to build up your account can open more opportunities for you. You can start to forecast future expenses, set future goals, and plan for them. You’ll ensure you have the resources to cover that future car down payment, braces for your child, a trip or a home purchase.  

LSS Financial Counseling has trusted, nonjudgmental financial counselors who can work with you to create a plan for saving money to cover unexpected expenses or reach financial goals. Call 888.577.2227 to set up a free, confidential appointment, or get your support online.

Maria Taylor

Co-author Maria Taylor is a certified financial counselor who works with Lutheran Social Service of Minnesota.




Sarah Jannusch

Co-author Sarah Jannusch is a certified financial counselor with LSS Financial Counseling.